The trading volume reached $1.8 billion, with a weekly increase of 150%. Behind these cold numbers is a brutal financial game surrounding prison sentences.
The high negative funding rate indicates that a large amount of capital in the market is crazily shorting, but a stronger force is aggressively buying, taking advantage of this crowd to execute a brutal short squeeze. The night before Do Kwon's sentencing hearing, the LUNA token staged a jaw-dropping performance.
On the evening of December 10, the trading volume of the LUNA series tokens approached $1.8 billion within 24 hours, briefly entering the top ten in market contract trading volume. Behind this trading frenzy is the unusual volatility of this token, which had already 'gone to zero,' occurring without any technical upgrades or positive ecological news.
Market participants are well aware that this is not an expectation for the revival of the Terra ecosystem, but rather a blatant speculation on the sentencing decision for Do Kwon on December 11.
01 Event background: From 'King of the Coin Circle' to the fall of a prisoner.
Do Kwon's story is arguably the most dramatic rise and fall in the cryptocurrency world. This Stanford graduate born in 1991 was once hailed as 'the South Korean Musk', founding the massive Terra cryptocurrency empire.
The algorithmic stablecoin TerraUSD (UST) and its sister token LUNA he created had a peak market value of $40 billion, ranking among the top five in the global cryptocurrency market.
However, in May 2022, TerraUSD unexpectedly decoupled from the dollar, triggering a 'death spiral'. In just five days, LUNA plummeted from $80 to nearly zero, and TerraUSD never regained its peg.
This crash not only caused investors to lose hundreds of billions of dollars but also triggered an entire 'cryptocurrency winter', leading to the bankruptcy of several crypto companies.
After the crash, Do Kwon began a life of hiding and fleeing, until he was arrested in March 2023 while attempting to board a private jet in Montenegro with a fake passport. After a struggle over extradition, he was extradited to the United States at the end of 2024 and pleaded guilty to two counts of fraud in August 2025.
02 Sentence gap: 7 years of speculative space creates $1.8 billion in trading volume.
Tomorrow's (December 11) hearing will no longer debate 'guilt or innocence', but rather the final decision on the length of the sentence. There is a huge gap between the prosecution and the defense team regarding sentencing recommendations.
Prosecution claims12 years imprisonment, believing this is sufficient to match the billions of dollars in losses caused by the Terra crash.
Defense application: 5 years imprisonment, emphasizing that Do Kwon has been detained in Montenegro for a long time and has a good attitude towards confession.
The 7-year gap in sentencing creates a perfect space for speculation on the LUNA token. Normal market logic suggests: if the founder is severely sentenced (12 years), the token will further approach zero. Hence, the market is flooded with short positions, leading to negative funding rates.
However, the main funds or 'stakeholders' do not need to believe that Do Kwon will be lightly sentenced. They just need to exploit the uncertainty of the verdict to pull prices upward, precisely hunting those overconfident and crowded short positions.
In the face of such extreme efficiency, moral judgments seem redundant. The asset attributes of LUNA have been transformed into a derivative note surrounding legal events. Death or imprisonment can also be 'monetized'.
03 Market shift: The evolution of liquidity from victims to predators.
Three years ago, those holding LUNA were retail investors who lost their life savings and funds that suffered heavy losses, with trading filled with anger and despair. Today, the microstructure of the market has undergone a complete overhaul.
The victims of that year have long left the scene. Now sitting across the table are new players: high-frequency quantitative teams, event-driven hedge funds, and speculators specifically hunting 'junk assets'.
For these new players, whether the Terra ecosystem has a future or whether Do Kwon is innocent is not only unimportant but even a form of noise. The only metric they care about is 'event beta', which measures asset price sensitivity to specific legal news.
In the face of such extreme efficiency, LUNA trading is no longer based on the fundamental value in traditional financial analysis but has become a purely event-driven game. Major funds know that the fundamentals have reached zero, but as long as there are disagreements and space for long-short battles, this 'shell' is the perfect trading target.
04 Harsh prediction: The fate after the trial is already determined.
Market analysis shows that regardless of the verdict, the fate of the LUNA token after the trial may end up similarly.
If Do Kwon is severely sentenced (12 years), market logic will revert to fundamentals, and the LUNA price will accelerate towards zero. However, if he is lightly sentenced (5 years), even if this result can theoretically be interpreted as 'positive', the reality will be 'the good news is fully priced in', and profit-taking will lead to massive sell-offs, triggering a 'Sell the News' scenario.
After the event, the token will most likely return to a state of no volatility. The outcome of this speculative feast has long been predetermined: volatility itself is the ultimate winner.
Looking back at history, similar patterns have played out multiple times with the LUNA token. Whenever news regarding Do Kwon's extradition or sentencing arises, the LUNA price experiences significant volatility. For example, after news surfaced that he might be extradited to South Korea, LUNA surged 20% because the market expected a lighter sentence for him in South Korea.
The liquidity efficiency of the cryptocurrency market has evolved to its extreme, capable of pricing anything: sentiment, bugs, memes, and of course, a person's freedom and the volatility of a trial.
Tomorrow, when Do Kwon stands in court to hear the verdict, whether the result is 5 years or 12 years, the $1.8 billion bet on his personal freedom will quietly come to an end. The price curve of the LUNA token will once again prove: financial markets can be ruthless enough to turn a person's prison ordeal into a pure gambling instrument.
